SINGAPORE: Singapore has announced a new intellectual property regime to encourage companies based in the country to exploit the income derived from their research and development activities.
Corporate income derived from intellectual property will be “incentivized” under the government’s new IP Development Incentive, according to annex documents published as part of Singapore’s 2017 budget.
The regime will replace the country’s existing IP incentives and comply with the Nexus approach for IP regimes enforced by the Organization for Economic Development and Cooperation as part of its 15-action project against multinational companies shifting their profits to low-tax jurisdictions.
The announcement is a “major change” for Singapore’s tax incentives regime, which has been a large part of its corporate income tax system for the past 40 years, Steve Towers, a tax partner and international tax leader for Singapore and Asia at Deloitte, told Bloomberg BNA in a Feb. 21 e-mail.
“It was expected that the government would have to do something to ensure that tax incentives are BEPS-compliant,” he said in reference to the OECD’s Base Erosion and Profit Shifting Project, which identified certain IP regimes as a harmful tax practice. “This particular response was not expected.”
